July 2018 Volume 5, Issue 9 The Dispatcher In this issue: Telematics Industry Insights by Michael L. Sena GM’s OnStar 1-2 Learning from GM’s OnStar Experiment An experimental work in progress ONSTAR IS AN EXPERIMENT and it is still a work in progress. In the Dispatch Central spring of 2018, GM management hit the reset button for its twenty- Quo Vadis Circenses? two-year-old sub-brand, saying that it would return to its original Dispatch Central 1-5 LARGE AUTO SHOWS, like those purpose of providing call center services to GM vehicle owners in in Detroit and Frankfurt, can Future of auto shows need of assistance. If a crash or breakdown occurs, ONSTAR per- feel like a circus. If you are Top car brands sonnel will be there to take the call and location message and de- working in the auto industry, Veoneer spins out from liver the necessary assistance as quickly as possible. It will leave you have the feeling that the Autoliv to the main car and truck brands, Buick, Cadillac, Chevrolet and shows are meant to flaunt German numbers GMC, the delivery of the other types of services it had added to your company’s wares to its portfolio, such as satellite radio, Wi-Fi hotspot and remote ac- other car company staff and Over-the-Air Updates 3-4 cess. The changes became effective in the U.S. and Canada on to give the media a chance to May 1st. Absolutely indispensable get a look at your latest When I dug a bit deeper and looked at what the reset actually models so they can write EU on Mobility 5 meant in practice, I found very little was being changed, at least glowing reviews. But as you An updated strategy doc- for the moment. For example, the current three-month free trial of walk around the halls, you ument ONSTAR's full suite of offerings for new car buyers will be cut to bump elbows with real car thirty days for Buick, Chevrolet and GMC vehicles, while Cadillac buyers and knees with their Musings 6 vehicles will stay with the longer free period. Also, the Remote kids, who are there to decide What have we done to our Access service to control key fob functions by smart phone is no if it will be a Toyota or a postal services? longer included in the basic tier of free ONSTAR U.S. services. ON- Honda that will be parked STAR service packages have gone from three tiers to five, reinforc- outside their home. ing my feeling that it is trying to make its service descriptions and Two recent Automotive News pricing as opaque as a mobile network operator. PRECAMBRIAN PARKING LOT Newscasts discussed There is something bigger going on here, bigger than moving ser- whether there is a future for vices around and tinkering with pricing. There are reasons why in the big shows at a time when 2016 GM launched MAVEN, its ‘personal mobility’ brand, rather car makers are deciding to than bundling car sharing into ONSTAR. There’s a reason why GM concentrate one or two of is investing $1.1 billion in CRUISE to add to SOFTBANK’s $2.25 bil- them and to take part in re- lion, rather than funneling money into the sub-brand that brought gional shows. Nissan reports GM to the high-tech table. It’s not lack of gratitude, but a realiza- that 80% of its sales leads When you are a wagon maker, tion by GM management that what is being served at the table, comes from regional shows, it is difficult to see how you and the guests sitting with them, have both changed, and GM had like the one in Atlanta. AN could become a maker of motorized cars unless someone best change as well. says that 26% of first-time- shows you how you can put the buyers in the U.S. are influ- motor on your wagon. It’s useful A star is born to three parents enced by what they see at to have a look back at GM took the ‘skunk works’ approach to its first major technology their regional shows. Audi, transitions that have occurred to initiative, rather than allowing each of the then six brands it had to gain a clearer understanding of BMW and Daimler have said work on their own telematics solutions and perhaps choose the what might succeed and what is that they will not be on the probably doomed to fail. Here is best of the litter. In the early 1990s, GM engineers worked along- floor in Detroit in January, a story about Fisher Body that side staff from Electronic Data Systems (a subsidiary at the time) makes interesting reading: 2019. With CES and off-site and GM Hughes Electronics (part of GM’s Delco Electronics Divi- https://en.wikipedia.org/wiki/Fis shows taking more of the her_Body sion) to create the first in-vehicle, wireless communications device spotlight, it looks like it is with the associated service infrastructure to respond to calls for time for the OEMs to start assistance and forward the information to the public safety an- thinking hard about where swering point. Rick Wagoner, GM’s President of North American they can get the best bang Operations, introduced ONSTAR at the Chicago Auto Show in Feb- for their marketing bucks. ruary 1996, and Chet Huber was the new wholly-owned subsidi- ary’s first President. Continued next page Continued next page “Most Telematics Industry Insights Page 2 of 6 Dispatch Central (cont.) Top Car Brand Values Learning from GM’s OnStar Experiment (continued from page 1) TOYOTA STILL NO. 1 in 2018 in brand value, according to BRANDZ Top in During the fourteen years Huber was Presi- both close and large to CADILLAC in the center, its annual Most Valuable Global dent and CEO, ONSTAR grew to over six million and GM is both distant and small. According Brands 2018 report. It’s the sixth subscribers, built a market leading brand and to the authors, this has both positive and neg- year in a row that Toyota has been intellectual property position, generated reve- ative effects for CADILLAC. On the positive first. nues in excess of $2 billion, and achieved in- side, a strong support brand, as ONSTAR had Toyota $29,987 dustry leading profitability. He retired from already become in 2001, reinforces consum- Mercedes-Benz $25,684 General Motors in 2009, along with most of the ers’ buying decision for the main brand. How- company’s management, and ONSTAR began ever, by promoting ONSTAR, which is used by BMW $25,624 a new life as a division of the company alt- the other GM car lines, it detracts from the Ford $12,742 hough still legally a subsidiary corporation. added value that would be specific to CADIL- Nevertheless, the ONSTAR brand had been LAC. Go to the CADILLAC web site and you are Honda $12,695 firmly established, and it continued to operate directed to the ONSTAR web site for services. Nissan $11,425 as a revenue generator. It is the same for all of the brands. Audi $ 9,630 What’s happening and why? Driven to distraction Volkswagen $ 5,986 There could be both technical and manage- The ONSTAR brand is doing more than dis- ment reasons to limit ONSTAR’s reach. It is tracting customers from the car brands; it is possible that the car lines want to be able to taking whatever luster the GM star has of its Veoneer select their own wireless infotainment and own. Mary Barra has been doing her utmost ON MAY 24, 2018, the Autoliv Board connectivity architectures. They may feel that to pump up the value of GM’s share price and of Directors approved the comple- the ONSTAR design is too limiting, designed to the company’s subsequent market valuation. tion of the previously announced fit all conditions but not tailored to their own People buy shares in GM, not ONSTAR, and spin-off of Autoliv’s subsidiary Ve- ideas about how they want to express their taking the high-tech focus away from GM as oneer, Inc., its electronics segment, unique selling points to their customers. the main object of shareholder value does into an independent publicly traded nothing to help GM’s main cause. It has had a Internal brand competition for resources also company. “The strategy is to build 52-week high of $46.48 in October of last year cannot be ruled out. The Pontiac and Oldsmo- two companies focused on and ded- and a 52-week low of $34.11 last June. This bile divisions were phased out in 2009 and icated to their respective markets, is peanuts in the tech circus, where Tesla which we believe will unlock sub- 2004 respectively because GM felt they were shares sell for around $300. SOFTBANK’s in- stantial additional value. I look for- taking sales from their neighboring brands, vestment in CRUISE gives that entity a market making all of them less profitable. ONSTAR is ward to seeing both companies cap of $10 billion, a fifth of its parent’s. prosper on their own,” said Jan not selling cars, but because it is offered Carlson, Chairman, President and equally on all of the car lines, it is not creating In June, 2009, when GM entered Chapter 11 CEO of Autoliv, who from June 29, anything that is unique to any of them. reorganization, then current stockholders lost will be President and CEO of Ve- their investments.